Too soon to declare qualifications dead

More than 100 employers wrote an open letter making the patently obvious case that not all jobs need qualifications.

The Productivity Commission, in its report on the tertiary education system, argued that government should “extend funding eligibility to students who do not intend to pursue full qualifications and remove specifications that limit the provision of short qualifications”.

Meanwhile, the ever-innovative Otago Polytechnic has launched EduBits, its new micro-credentials, and is working with NZQA on an evaluative trial of the approach.

And, in an extraordinary speech in 2016 for the improbably named ‘Singularity University’, the chair of the New Zealand Qualifications Authority announced: “The day of the qualification is over!” – a statement met with spontaneous applause from the audience (apparently, not ironic).

Meanwhile, the new Government is preparing to launch its ‘hop-on-hop-off’ study policy, which would see less emphasis put on qualification completion.

So many ideas! So much energy! And all quite untainted by references to the evidence.

What do we know about the value of qualifications?

Firstly: it’s obvious from dozens of studies that young people do get a benefit from qualifications. Those with qualifications earn more and have greater protection from unemployment. And the higher the level of the qualification, the higher the income and the greater the protection.

That’s not to say that those benefits are entirely due to their qualifications. Or that in a different labour market and in a different qualifications landscape, those benefits would apply. But in the world we live in now, qualifications are associated with better earnings and employment protection.

Secondly, in an important analysis of the employment outcomes of tertiary education published in 2009, David Scott looked at what happens to people who leave tertiary education early, having had a perfect record but not having completed a full qualification.

Scott used sophisticated statistical analysis to compare the earnings of people who left tertiary education having passed all their courses, but not having completed a qualification, with those who did complete. Looking at younger leavers, he found that, three years after leaving study, those with a perfect record but without a qualification earned less of a premium than those with a qualification. In short, the labour market rewarded completion of a qualification by young people.

But the reverse applied with older leavers – in that group, those who passed all their courses but left without finishing a qualification gained a (marginally) greater reward than those who did complete their qualification.

So what can we conclude?

Gaining a qualification is important for young people. To get the benefit of tertiary study requires more than simply achieving a set of passes; it requires a qualification. But the picture is more mixed for older people re-entering study.

That makes intuitive sense. Employers take account of experience as well as qualifications. Those who are young – inevitably – have less experience, certainly less relevant experience, than those who are already in the workforce.

So, for young people, qualifications really matter. For young people, good qualifications give breadth of knowledge; they develop generic skills (not simply knowledge on the topic of study); they are portable and hence increase the dynamism of the labour market.

Qualifications are subsidised by the government because they give a benefit to the labour market and to learners, not just to the employer. (That’s the justification for the differential funding rates in industry training – qualifications create greater public value and so are funded at a higher rate than ‘traineeships’, where trainees undertake components of qualifications without necessarily seeking a full qualification and where a greater share of the benefit is captured by employers.)

But for those who study later in their lives after having time in employment, the picture is mixed. David Scott’s work suggests that, for some older people, it may pay to study only what they need to learn, rather than a whole qualification.

That squares with another important study: Sarah Crichton and Sylvia Dixon looked at the effect of qualification completion for graduates who had already been in the workforce before going into study.

Crichton and Dixon compared those graduates with a matched group – a group of people who were similar to the graduates except in not having undertaken further study. The comparison showed that women didn’t gain an earnings benefit from their qualification unless it was at bachelor’s level or higher. Men actually had an earnings penalty from completing a qualification below bachelor’s – that is, those who gained a qualification fell below their peers who didn’t study. Men gained a small benefit from completion of a bachelor’s qualification and a more substantial gain from a master’s degree.

Both the Scott study and the Crichton and Dixon analysis are old and used a limited dataset. With better data and a longer time series, with the renewed focus on the value of qualifications, with the arrival of interest in micro-credentials, now is the time for the government agencies to renew, update and deepen the analysis of the evidence on the value of small fragments of learning. It would be good to see the policy thinkers catch this wave.

Lifelong learning is a means of boosting productivity, reducing human capital depreciation, and improving workers’ outcomes in the labour market. Given the apparently low financial return on study for those in work, and given the evident importance of a full qualification as a person’s initial tertiary education, one of the options for the experiments in micro-credentials that are unfolding may be lifelong learning.

In the recent Survey of Adult Skills, New Zealanders in employment had high take-up of further education – the third highest of all participating countries. The greatest barrier to the take-up? Time: people reported they were too busy at work, couldn’t fit extra learning around family responsibilities or found that the courses they wanted were at inconvenient times or locations. If time is important and the returns on extra learning are low, then full, long qualifications won’t fit workers’ lifelong learning needs.

It was encouraging to see that Otago Polytechnic appears to have pitched its initial EduBits offerings to the lifelong learning market.

The importance of qualifications in regulated occupations

A further value of qualifications is how they work in regulated occupations. I feel safer if the electrical work in my home is completed by someone who knows the whole job, not merely the immediate task. One part of the cure for leaky homes was to strengthen the qualifications of builders. The Education Council wants to investigate longer, not shorter qualifications for teachers.

When I was facing surgery, I was enormously comforted by the sight, in the frame behind the surgeon’s left shoulder, of the University of Otago MB ChB and, over his right shoulder, his certificate of membership of the Royal Australasian College of Surgeons. The butcher and the surgeon both know mammalian anatomy and both learn to wield a knife.

The difference is that the surgeon has to keep the patient alive – and that requires an understanding of medicine, physiology and a thousand other disciplines with names I can neither remember nor pronounce. That requires breadth.

It’s a bit soon to announce the death of the qualification.

Roger Smyth has 30 years’ experience working in tertiary education – initially in senior management in a university and later in the Ministry of Education. At the Ministry, he managed the Tertiary Sector Performance Analysis team and then took over as Group Manager, Tertiary Education Policy. He retired from the Ministry in April last year and now works as an independent adviser on and contractor in tertiary education.